01-26-1983 Council Agenda - Laserfiche WebLink

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Investing in Six -month CD Participations The floating or fixed rate six -month Certificate of Deposit Participations ( CDP's) are the short -term alternative for the investor desiring minimal market risk, while investing at attractive money market yields. Additionally, CDP's are insured as to princi- pal and interest by the FDIC or FSLIC, subject to the general $100,000 insurance ceiling. The six -month COP represents a specific interest in a negotiable $100,000 certificate of deposit issued by a Federally - insured national bank or sav- ings and loan association —and made available through Merrill Lynch, Pierce, Fenner & Smith Incorporated. The offering yield for the floating rate six -month CDP will be fixed for the initial 30 days and will float for each of the subsequent five months. The rate will be set by the bank or savings and loan association and will be higher than Donoghue's Money Fund Average'" The offering yield for the fixed rate CDP will be set at the time of purchase and will be in effect for the full six -month period. Participations in the CD's of several depository institutions will be available at the same time and each CDP will bear the same rate of interest. You can select the institution in whose CD you want a participation at the time of purchase simply by contacting your Merrill Lynch Account Executive, who will provide you with the names of the depository institutions. Your six -month CDP will be the direct obligation of the national bank or savings and loan association issuing the related CD The minimum investment for the six -month CDP is 'S1.000. with incremental investments of 51,000. up !o 5100.000 for an entire CD. Interest for the float- :rig rate CDP will be automaticaily credited to your rvlernll Lynch account every month. as will principal at maturity, unless you direct otherwise. Interest and principal for the fixed rate CDP will be auto- =or :� .rr 1, S - ._irTS (eser.eU =r c,g, matically credited to your account at maturity. unless you direct otherwise. Since it may be inconvenient for you to collect interest and princi- pal payments, Merrill Lynch, as custodian for your CDP, will collect these payments on your behalf. Should you wish, you may obtain a CDP assign- ment, which would entitle you to collect principal and interest payments directly from the depository institution. However, for greater convenience, Merrill Lynch does not encourage investors to request a CDP assignment. If you should need to convert your investment to cash, Merrill Lynch can help. Although we are not obligated to do so, we fully intend to maintain a secondary market by purchasing CDP's from investors at the then prevailing market rates. There is no option to redeem the CDP's prior to maturity and, accordingly, a customer purchasing a six - month CDP should intend to holdit to maturity or look to our secondary market for liquidity. Benefits of Six -month CD Participations J Insurance —The six -month CD Partic p O'ons will be insured as to principal and interest by the FDIC or FSLIC, as appropriate. to a maximum of $100,000 (subject to the general 5100.000 insur- ance ceiling). ;J Short Maturity allows investors flexibility to alter their investment objectives in a short ; er.oc J Choice of Variable or Fixed Rate CDP - -7! R variable rate COP will float at a rate over e ;- ignited average of money market fund c,.os rate is fixed for the Initial month by't :: cab< ings and loan institution and v: *I' be aril isteit month thereafter The fixed r.r!e GOP o(`. attractive alternative f,ir #ho'e,m,(Ht '' .. •• to lock in current interest rates for six (rut Low Minimum Investment of 5t 000 and increments of 51.000 allow individuals to partite pate in the six -month CD marl:r:t at in ,mp ov :rl rate of return. 7 3